Entries by Douwe Jan Joustra

Circular strategy Fashion

Focus areas Circular Fashion/Circular Economy

Based on an internal evaluation of the endeavors on changing the Fashion industry towards circular business models, in this blog, I will enlighten some trends that can be seen. 

Systems change

Circular economy has a clear perspective for fashion: create an industry that can be identified as a ‘force for good’. From a circular perspective this implies fundamental changes in the industry as well B2C as B2B. This brings two basic needs: ‘optimization’ is the first relevant need. The fashion/apparel industry has an enormous negative impact (externalities) on people's lives (inequality) and climate, ‘plastic oceans’, water quality, biodiversity, resource depletion and pressure on waste systems. Addressing these issues has a short -term perspective, this is why we should choose to create a balance in ‘optimization’ and ‘systems change’. Optimization/efficiency is aimed at actual problem solving. Examples are ZDHC (Zero Discharge of Hazardous Chemicals) and Canopy (saving forests). Where systems change/effectiveness is key, we see projects like Fashion for Good, the ‘Bridging the Gap’ initiatives on implementation of circular business models and all kinds of advocacy initiatives. See the differences depicted in the schedule below.

Service-based

In Circular Economy the key element of new business models is the focus on ‘performance-based contracting’. This has been translated by businesses into service-based contracting as the core of the CBM’s in fashion. This is not with a focus on individual products but on the customers’ needs and hidden-needs: service them in their lifestyles. There are two reasons for this development:

  1. Individual products in the fashion industry have a reasonable ‘low’ value, which means that leasing-contracts are inconvenient and mainly to expensive in their management. Inconvenient because the consumer has 50+ products in their closets and have a lease-contract for each item would create ‘chaos’ in their financial administration. To expensive is mainly a worry on the side of the companies: managing each of these contracts would take too much time (and money) in their management and
  2. Consumers are looking for exploration of their individual lifestyles, which means that standardization is not really an option. Fashion as a service is an option, because then the focus is on facilitating lifestyles and not on individual products.

So, what are the characteristics of such services? Here we see three elements that are the basics of services:

  1. Ownership of the products stays with the professionals, whether it is the producer or the retail or a styling-specialist, the consumer becomes the user. Ownership implies responsibility and professionals are far better equipped to understand the consequences of this responsibility. This is why ICE does not pledge for ‘extended producer responsibility’ as policy development but sees the need for ‘full producer responsibility’;
  2. Usership of fashion means that the professionals provide the customer/user with the right fit to their lifestyle, in practice it is often described as professional management of the closet. The products in this service approach become ‘assets’ in the business case of the professionals and as well known in business rationales: asset management is key for economic value and
  3. Longer lasting relations between the service provider and the customers are elementary for a good service contracting: the service provider needs to know the customer and helps the customer to develop his/her style over time. Longer lasting connections are a strong basis for business continuity.

Many examples of circular fashion, in the B2C-domain, at the moment, are not fundamentally circular mainly because the changes to services and usership/ownership are not part of the deal flows:

  • Sharing: is a strong development in the market, though mainly unseen and part of the informal market. Millennials use each other’s closets as a source for clothing. One example of a serious business case is the development in social entrepreneurship, like ‘Lena, the Clothing Library’. This can be seen as an experiment for the industry, where quite some knowledge can be harvested on users/members behaviors and choices;
  • Re-use: the growth of vintage fashion, trade on Vinted and other sites, small shops, thrift stores and even in retail brands (Burberry e.g.) is a good extension of product-life but mainly attracts new customers to brands, the existing customer will not change;
  • Repair: many pieces of apparel go into the waste-system because of technical issues (small: missing buttons, big: change of style or change of body/fit) which could be repaired, that market seems to be growing also. It brings a better longevity for garments and
  • Recycling: collect for recycling is initiated by many brands now a days. It helps to get garments in the right part of the recycling industry. Recycling brings normally an enormous decrease in value and should be the last step. The focus on recycling is more or less ‘waste-policy’ instead of being elementary in the circular economy. Of course, at the end of the product life recycling of materials is needed, but that needs a strong focus on ‘design for use, re-use and recycling’ in the industry: a responsibility that is not yet taken overall.

The other phenomena in the market is “Rental”: known as a good business model for party gowns and suits/tuxedo’s already since a long time. This is quite a good model as a CBM. Now this is a niche-market and normally very specialized. Longevity is key for the business case as well as design and ‘uniqueness’. The element of service is not really around in this retail domain, the customers find their way to the rental shop incidentally (which means incident by incident) and there is no long-term commitment or contractual relation between the rental-provider and the user(s).

Fashion as a Service (FAAS) is the generic terminology for new business models, based on performance (support the customer’s lifestyle), responsibility (professional has responsibility), products as assets and value creation and value maintenance. Practically: the retail becomes service-provider!

Plotted, this would mean:

Service-based

In Circular Economy the key element of new business models is the focus on ‘performance-based contracting’. This has been translated by businesses into service-based contracting as the core of the CBM’s in fashion. This is not with a focus on individual products but on the customers’ needs and hidden-needs: service them in their lifestyles. There are two reasons for this development:

  1. Individual products in the fashion industry have a reasonable ‘low’ value, which means that leasing-contracts are inconvenient and mainly to expensive in their management. Inconvenient because the consumer has 50+ products in their closets and have a lease-contract for each item would create ‘chaos’ in their financial administration. To expensive is mainly a worry on the side of the companies: managing each of these contracts would take too much time (and money) in their management and
  2. Consumers are looking for exploration of their individual lifestyles, which means that standardization is not really an option. Fashion as a service is an option, because then the focus is on facilitating lifestyles and not on individual products.

So, what are the characteristics of such services? Here we see three elements that are the basics of services:

  1. Ownership of the products stays with the professionals, whether it is the producer or the retail or a styling-specialist, the consumer becomes the user. Ownership implies responsibility and professionals are far better equipped to understand the consequences of this responsibility. This is why ICE does not pledge for ‘extended producer responsibility’ as policy development but sees the need for ‘full producer responsibility’;
  2. Usership of fashion means that the professionals provide the customer/user with the right fit to their lifestyle, in practice it is often described as professional management of the closet. The products in this service approach become ‘assets’ in the business case of the professionals and as well known in business rationales: asset management is key for economic value and
  3. Longer lasting relations between the service provider and the customers are elementary for a good service contracting: the service provider needs to know the customer and helps the customer to develop his/her style over time. Longer lasting connections are a strong basis for business continuity.

Many examples of circular fashion, in the B2C-domain, at the moment, are not fundamentally circular mainly because the changes to services and usership/ownership are not part of the deal flows:

  • Sharing: is a strong development in the market, though mainly unseen and part of the informal market. Millennials use each other’s closets as a source for clothing. One example of a serious business case is the development in social entrepreneurship, like ‘Lena, the Clothing Library’. This can be seen as an experiment for the industry, where quite some knowledge can be harvested on users/members behaviors and choices;
  • Re-use: the growth of vintage fashion, trade on Vinted and other sites, small shops, thrift stores and even in retail brands (Burberry e.g.) is a good extension of product-life but mainly attracts new customers to brands, the existing customer will not change;
  • Repair: many pieces of apparel go into the waste-system because of technical issues (small: missing buttons, big: change of style or change of body/fit) which could be repaired, that market seems to be growing also. It brings a better longevity for garments and
  • Recycling: collect for recycling is initiated by many brands now a days. It helps to get garments in the right part of the recycling industry. Recycling brings normally an enormous decrease in value and should be the last step. The focus on recycling is more or less ‘waste-policy’ instead of being elementary in the circular economy. Of course, at the end of the product life recycling of materials is needed, but that needs a strong focus on ‘design for use, re-use and recycling’ in the industry: a responsibility that is not yet taken overall.

The other phenomena in the market is “Rental”: known as a good business model for party gowns and suits/tuxedo’s already since a long time. This is quite a good model as a CBM. Now this is a niche-market and normally very specialized. Longevity is key for the business case as well as design and ‘uniqueness’. The element of service is not really around in this retail domain, the customers find their way to the rental shop incidentally (which means incident by incident) and there is no long-term commitment or contractual relation between the rental-provider and the user(s).

Fashion as a Service (FAAS) is the generic terminology for new business models, based on performance (support the customer’s lifestyle), responsibility (professional has responsibility), products as assets and value creation and value maintenance. Practically: the retail becomes service-provider!

Plotted, this would mean:

Beoordelingssystematiek Circulair Aanbesteden

De gemeente Apeldoorn heeft de aanbesteding van het werkprogramma ‘De Parken’ (GWW) gedaan op basis van de methodiek ‘Rapid Circular Contracting’. In de kern genomen is het de uitvraag gericht op het vinden van de juiste marktpartij die als partner in de uitvoering kan optreden vanuit een circulair perspectief. Deze partij levert de services die […]

Design Thinking in Circulaire Economie

in Dutch… sorry for the English readers.. CCC-incorporated Design thinking Circular Economy: Co-creation, Creative and Collaborative   Het proces om tot implementatie van circulaire economie te komen in bedrijven, bij overheden en in instellingen vraagt intensieve aandacht. In praktijk zien we een kloof ontstaan tussen de ‘mooie gedachte’ en de praktische in- en uitvoering. Met […]

The CE-Implementation Gap

Working on circular economy, for about 8 years, I see a 'problem' dawning. It is a strong trend that can be identified in our activities with a focus on implementation of circular business models in public and private companies/organisations. This is the 'Valley of death of implementation CE'.

First I would like to point out the basic strategy that we use to enhance the quality and attention for circular economy is the 3i-strategy: inform, implement and innovate. We perceive this as the most practical order of working. What do we see as crucial in these three phases:

Inform

This basically is: just telling people about the why, how and what of circular economy. Not based on ideology but based on sound economical perspectives. Economical aspects are mostly based on business-continuity through new forms of contracting and therefor new relations between providers and users. Underlying is of course the availability of resources, the waste of materials, decline of ecological values and neglect of social quality. Circular economy implies re-thinking and re-design of services and products: the way your business does business. This line of working is very successful in the Netherlands. In the last years we were able to reach out to about 45% of all companies: they are -more or less- familiar with the concept. First the larger companies and more and more with small and medium enterprises (SME's) and we proceed this with at least 25 local meetings on Circular Business throughout the country.

Implement

On all kinds of levels the implementation has begun. Frontrunners are as well companies as (local) authorities. They are working on new business models, new services, new purchasing and creation of the conditions for growth of the circular economy. Each in his/her own role. Dutch governments (national and local/regional) give circular economy a strong emphasis, though realisation brings new procedures and new relations with private partners. Companies try to change their business models and have different levels of succes. Common problem: the availability of 'time to change' and the existing interests and need for market positions. Here the 'Implementation Gap' becomes visible.

Innovate

The circular perspective and the new way of perceiving reality brings the need for innovations, on products, on services and business models. In other words this is about innovation on realisation, organisation and systems level. Not always an easy jobs, since there is a world of complexity connected to these innovations.

the Valley of Death Implementation CE

We are all familiar with the Valley of Death in the innovation theories. An innovator has a technical innovation and sees a high value in the market. The market does not respond to many of these innovations and in the end there will not be a good business case and the innovation ends in the 'valley of death'.

In circular economy we see an other valley of death between the phase of inform and the second phase implement. Enthusiasm is around, but it lacks time, attention and the readiness to change in organisations. The is where we can make a difference, based on three kinds of initiatives:

First: Go Middle-out!

In our current society there seems to be a strict order between public and private initiatives. Many initiatives come from individual businesses, start-ups or the 'energetic society'. In the mean time, governments on all levels, tend to create 'plans for action' (Roadmaps, Policy planning, Transition Arena's e.g.). So top-down we see plans and some activities, often with a focus on creating awareness or capacity development. On the other hand the initiatives that can be seen as: bottom-up. One of the basic principles of circular economy is collaboration, so why don't we work far more often from the perspective: middle-out. The local, regional and (inter-)national governments create conditions for growth of the circular economy. The best example is the purchasing quality of public partners: the biggest customer of the country (at least in the Netherlands) becomes a 'launching customer'. That gives companies, the private parties, room for change! Do not ask for a product, ask for services that can be the result of a collaborative endeavour!

Second: Provide practical support!

Knowledge and insights are mostly based on specialisms in waste- or resource management. Circular Economy needs to elaborate the changes in business models, new relations between provider and users. In the Netherlands we have a strong group of people who were involved in the development of the Circular Economy from the early days. They have gained insights in successful and failed initiatives as well in the private sector as the public domain. Use them to enhance the quest for circular business models in a broad variety. Some of these specialists are small scale organisations or independent professionals: see them, hear them, feel their value!

Three: Use design thinking!

Circular business implementation is not just an activity based on marketing or external communication. It is a process of change throughout the whole organisation/company. People are always hesitant to implement the idea of others, maybe the 'not invented here' syndrome, but al least an often seen effect. Recently we saw in one of the bigger public procurement procedures that the offers bij consortia of companies were made, based on a internal design proces. Not only the technicians were involved but also personnel from supportive parts of the companies: secretaries, maintenance technicians, marketing and other external communicators. In the end it was (at least in the most successful consortium) a proces of design thinking. The power of design thinking is the connectivity with the new way of working, new services and the whole organisation. It brings enthusiasm, collaboration, power of ideas for change together. So use the power of design thinking as a strong methodology for implementation of circular business models.

1000 listeners, 10 doers? Let us go from 1000 listeners to 500 scouting and 500 implementing circular business models!

Ten Commandments for the Circular Economy

  Circular Economy is growing fast in individual companies but also on regional, national and global level. Though we see a transformation from ‘preacher to salesman’ in the world of sustainable development, we need to see the essentials over and over again. In my blogposts I try to give insights in the developments that can […]

Circulaire economie: grenzen verleggen

 

Grenzen, dat is een voortdurend thema in de ontwikkeling van circulaire economie. Hoogst actueel, als je naar het huidige wereldtoneel kijkt. Grenzen leiden in politieke zin tot strijd en dat van kwaad tot erger. Ik kijk naar grenzen als scheidingen maar vooral als verbindingszones.

De ‚grens’ is een belangrijk kenmerk van ecologische systemen. Kijkt u, als voorbeeld, even mee naar de wereld van planners en bouwers.

Van A naar Beter” is de slogan van Rijkswaterstaat. Die gaat over de weg- of waterverbinding tussen A en B, maar ecologisch gezien is het de scheiding tussen C en D. De wegenbouwers kijken naar voren en zien dan de verbinding, de ecoloog kijkt naar links en rechts en ziet gescheiden landschappen. Het Deltaplan gaat over de scheiding van nat en droog. De ecoloog vraagt hoe de verbinding tussen nat en droog vorm krijgt. Dat is het kenmerk van grenzen: het overbruggen van verschillen: tussen nat en droog, hoog en laag, zout en zoet, zwart en wit of natuur en cultuur of nog scherper tussen economie en ecologie inclusief de sociale dimensies. Dat is de grote opgave waar we als samenleving nu voor staan.

De ontwikkeling van Circulaire Economie en de bijbehorende ontwikkeling van Grondstoffenbeleid, zet het gevoel van urgentie, dat er verlammende grenzen zijn, sterk aan. Aan de ene kant zeggen wij: dus stapsgewijs aan de gang met wat haalbaar is (huidige praktijk: Van Afval naar Grondstof) en de noodzakelijke richting (andere businessmodellen met nieuwe verdeling van verantwoordelijkheden). Daarin is een spanning te herkennen bij de transitiepaden Circulaire Economie op basis van het Grondstoffen Akkoord. We lijken weer te gaan strijden voor ons eigen gelijk, een grensgevecht dat heel veel energie kost met uiteindelijk nauwelijks resultaat. Coöperatief en toekomstgericht, dat is de echte vorm van beschaving! Of heeft iedereen ook hier zijn eigen ‚green frontier’?

Harde en zachte grenzen

In ecologische zin zijn harde grenzen (die weg, de kademuur, de klassieke dijk), op zijn gunstigst nog een beetje interessant als er een specifiek beheer wordt gevoerd. Maaien en afvoeren kan leiden tot mooie dijkhellingen en een kademuur kan bijzondere soorten herbergen. Kleine eilanden met een beperkte eigen kwaliteit. De grens als scheiding, de limes convergens.

Zachte grenzen zijn interessanter. Een zachte grens, de limes divergens, is de verbinding tussen bijvoorbeeld de overgang van nat naar droog met als belangrijkste karakteristiek: de diversiteit. De ecoloog ziet de moerassige overgang van nat naar droog recht voor zich en van inks naar rechts een ecologische verbindingszone. De grens is een verbinding geworden.

Er zijn wel harde grenzen aan de groei. We weten dat er slechts één voorraad grondstoffen is die de Aarde vormt. Bij het winnen van die grondstoffen lopen we tegen de grenzen aan van het acceptabele. De planeet wordt leeg geschraapt met grote schade door uitputting en het verdwijnen van kostbare ecosystemen.

De 'moderne' wereld dacht tot voor kort dat er een harde grens is tussen ecologie en economie. Circulaire economie geeft een perspectief op verbinding: ecologie en economie zijn natuurlijk verbonden. De opgave is om de kracht van de zachte verbinding te ontwikkelen zodat er nieuwe waarden ontstaan voor de economie en tegelijkertijd voor de ecologie en daarmee ook voor mensen. We hebben er een ‚taal’ voor gevonden in de circulaire economie, die gebaseerd is op ecologische principes.

Toch zien we nu al grensgevechten ontstaan in de circulaire economie: is een nationale grondstoffenpolitiek noodzakelijk? Of zoeken we naar oplossingen voor hergebruik van afval, van afval naar grondstof? Of gaat het om werkelijk nieuwe business, vandaag en morgen? Hoe worden economie en ecologie (en natuurlijk de samenleving) tot een 'samen en levend' systeem? Is de echte grens hier het verschil van kijken naar het verleden en het bestaande én het kijken naar vernieuwing en verandering voor de toekomst die nu begint?

Voor de ontwikkeling van circulaire economie is het realiseren van verbindende grenzen de transitie-opgave: diversiteit en kwaliteit versterken! De grens wordt de verbinding naar biodiversiteit, de kwaliteit van het leven, werk, respect voor de natuur en voor de planeet. Van concurrentie naar coöperatie. Of zoals de ecoloog zegt symbiose.

Zachte grenzen, verbindende grenzen, als dragende factor voor de toekomst.

Ecology of Things

Smart systems Working on Circular Economy, I encounter almost every day quotes like ‘design of smart solutions’ or ‘design of the smart city’. In the second sentence, after these quotes, you will hear as a second statement that we need to be prepared for the ‘Internet of Things’ as a smart solution. It gives me […]

10 circular essentials

Circular essentials is a new view on the development of circular economy and creating circular businesses. Based on the change from deliverance of products towards the next step, the product as a service, to the essential change: service is the product! In my work as consultant on implementation of circular economy, I see that discussions tend to focus on […]

Rio Circular!

Early June 2016 there was the FIRJAN (Federation of Industry Rio de Janeiro) conference on Circular Economy in cooperation with the Dutch Consulate in Rio. I was invited to be the key-note speaker and to participate in a Round Table on CE & strategy. This resulted in some perspectives and reflections on the actual situation […]